Advanced Accounting · AS 27 Financial Reporting of Interests in Joint Ventures

Jointly Controlled Operations and Jointly Controlled Assets under AS 27

Updated 4 October 2026 · Fact-checked

Under AS 27, in jointly controlled operations the venturer records the assets it uses, the expenses and liabilities it incurs, and its share of income from the sale. For jointly controlled assets it also records its share of the assets, joint liabilities and joint expenses, and of the income from output. No consolidation procedures are needed.

Understand Jointly Controlled Operations and Jointly Controlled Assets

A joint venture is a contractual arrangement where two or more parties undertake an economic activity that is subject to joint control. AS 27 names three forms: jointly controlled operations, jointly controlled assets and jointly controlled entities. This page covers the first two. Neither of them creates a separate entity.

In jointly controlled operations, each venturer uses its own assets and resources for the venture. Think of two firms where one builds a part and the other assembles it, and both sell the final product. There is no common pool of assets and no separate books. Each venturer keeps its own records of what it spends and owns.

So the venturer recognises the assets it uses, the expenses and liabilities it incurs, and its share of income from the sale of goods or services by the venture. Because these items are already in its own books, AS 27 says no adjustments or consolidation procedures are needed for them in the venturer's separate or consolidated statements. Separate records for the venture as a whole are not needed, although the venturers may prepare management accounts to judge performance.

In jointly controlled assets, the venturers jointly control, and often jointly own, one or more assets contributed to or acquired for the venture. The assets are used to get benefits for the venturers. Each venturer takes a share of the output and bears an agreed share of the expenses. An oil pipeline shared by several oil companies is the usual example.

Here the venturer recognises its share of the jointly controlled assets, classified by their nature, and any liabilities it has incurred. It also recognises its share of joint liabilities, its share of income from the venture's output, its share of the venture's expenses, and expenses it incurred itself. These items are included in the venturer's own books line by line. The accounting is the same in separate and consolidated statements.

Key rules to remember

Jointly controlled operations: what the venturer records: Own assets used + Own expenses and liabilities incurred + Own share of income from joint sale; Items are already in the venturer's books. No separate consolidation entry is needed.
Jointly controlled assets: what the venturer records: Share of jointly controlled assets (by nature) + Share of joint liabilities + Share of income from output + Share of joint expenses + Own expenses and liabilities; Share is as per the agreement. Show each item under its own head, not as one net investment.
Venturer's share of a joint item (working aid, not an AS 27 formula): Venturer's share = Total amount × Agreed ratio for that item; This is only a calculation aid. AS 27 does not give this formula. Use the ratio in the agreement for each item: the ownership ratio for assets, the expense-sharing ratio for joint costs and the income-sharing ratio for income. These ratios may differ.
Venturer's profit or loss: jointly controlled operations: Share of income from joint sale − Expenses incurred by the venturer itself; There are no joint expenses in operations. Each venturer bears only its own costs.
Venturer's profit or loss: jointly controlled assets: Share of income from output − (Own expenses + Share of joint expenses + Depreciation on share of the asset); Share of joint expenses applies only to jointly controlled assets. Depreciation is charged on the venturer's share of the asset, if the question gives it.

How to solve Jointly Controlled Operations and Jointly Controlled Assets questions

Use this method for any question on jointly controlled operations or assets. First decide the form of the venture, then pick out only the items that belong to your venturer.

1Read the facts and decide the form. Own assets used by each venturer, with no pooled asset, means jointly controlled operations. A jointly held asset means jointly controlled assets.
2Identify the venturer whose books you must write and note its sharing ratio.
3List the expenses and liabilities this venturer incurred on its own. Record them in its books as usual.
4For operations, record the venturer's share of income from the joint sale. For assets, also record its share of the jointly controlled assets and joint expenses.
5Split joint amounts by the agreed ratio. Apply the ratio to each item, such as asset cost, running cost and income.
6Classify each item by its nature, for example fixed assets, creditors or expenses. Do not show a single net investment.
7Compute the venturer's profit or loss. For operations: its share of income less its own expenses. For assets: its share of income less its own expenses, its share of joint expenses and depreciation on its share of the asset.
8State clearly that the venturer includes these items in its own books, so no separate consolidation procedures are needed for these two forms.

Quickest way: Three-line sorting method for AS 27 questions

When to use it: Use it when a question mixes several venturers and many figures, and you have limited time.

For MCQs, ask: is there a separate entity? If not, it is operations or assets. If there is a separate entity, it is a jointly controlled entity, which is a different treatment.
Is there a pooled asset? Yes means jointly controlled assets. No means jointly controlled operations.
For written answers, start with a small table of your figures: own cost, share of joint cost (assets only), share of income. Then add it up.
Write one line naming the form and one line stating the AS 27 treatment before the working. These earn marks even if a figure goes wrong.
Check your answer. Share of income minus the right costs should equal the profit you show. For operations the costs are own costs only. For assets they are own costs, share of joint expenses and depreciation on the asset share.

Common mistakes in Jointly Controlled Operations and Jointly Controlled Assets

Treating every joint venture as needing proportionate consolidation.
Students remember the jointly controlled entity rule and apply it everywhere.
Fix: Remember that operations and assets have no separate entity. The venturer simply records its items in its own books.
Showing the investment in jointly controlled assets as one net figure.
It looks like an equity investment.
Fix: Show the share of each asset and liability by nature, for example plant, building or creditors.
Recording the whole joint income or the whole asset in one venturer's books.
Students forget to apply the sharing ratio.
Fix: Take only the venturer's share of income and jointly held items. Include 100% of its own costs.
Leaving out expenses the venturer paid itself.
Students focus only on the shared items.
Fix: Include the venturer's own expenses in every profit calculation. For jointly controlled assets, add them to its share of joint expenses before computing profit.
Deducting a share of joint expenses in jointly controlled operations.
Students carry the assets formula over to operations.
Fix: In operations there are no joint expenses. Deduct only the venturer's own expenses from its share of income.
Confusing the two forms because both have no separate entity.
The wording is similar.
Fix: Ask one test question: is there a jointly held asset? Yes means assets; no means operations.
Applying a single ratio when the agreement gives different ratios for income and cost.
Students assume one ratio fits all.
Fix: Read the agreement and apply each ratio to its own item.

Worked examples

Example 1

A Ltd and B Ltd undertake a jointly controlled operation to make and sell a machine. A Ltd makes components costing ₹6,00,000. B Ltd assembles and incurs ₹4,00,000. They sell the machine for ₹14,00,000 and share sales income equally. Each bears its own costs. Show the profit of each venturer.

Show the solution

There is no pooled asset and no separate entity, so this is a jointly controlled operation.
Each venturer records its own costs in its own books. A Ltd: ₹6,00,000. B Ltd: ₹4,00,000. There are no joint expenses.
Each records its share of income as per the agreement: ₹14,00,000 × 1/2 = ₹7,00,000.
A Ltd profit = ₹7,00,000 − ₹6,00,000 = ₹1,00,000.
B Ltd profit = ₹7,00,000 − ₹4,00,000 = ₹3,00,000.
Check: total profit = ₹4,00,000 = ₹14,00,000 − ₹10,00,000.

Answer: A Ltd profit is ₹1,00,000 and B Ltd profit is ₹3,00,000. The items are already in each venturer's own books, so no separate consolidation is needed.

Example 2

P Ltd and Q Ltd jointly control a pipeline that cost ₹50,00,000. The agreement uses different ratios for different items. Ownership of the pipeline is 50:50. Output and total joint running expenses of ₹10,00,000 are shared 60:40 (P Ltd : Q Ltd). P Ltd sells its 60% share of the output for ₹20,00,000, so ₹20,00,000 is P Ltd's income only, not the total output value. P Ltd also has its own admin expenses of ₹1,00,000. The pipeline is used for the full year. P Ltd charges depreciation at 10% a year on its 50% share of the cost, with no residual value. Show P Ltd's entries and profit for the year.

Show the solution

The pipeline is jointly controlled by the venturers, so it is a jointly controlled asset.
Ownership is 50:50, so P Ltd's share of the asset cost = ₹50,00,000 × 50% = ₹25,00,000.
Depreciation on P Ltd's share = ₹25,00,000 × 10% = ₹2,50,000. Closing book value of its share = ₹25,00,000 − ₹2,50,000 = ₹22,50,000, shown under fixed assets.
The 60% ratio applies to output and running expenses, not to ownership. P Ltd's share of joint running expenses = ₹10,00,000 × 60% = ₹6,00,000.
P Ltd's own admin expenses = ₹1,00,000.
Total expenses = ₹6,00,000 + ₹1,00,000 + ₹2,50,000 = ₹9,50,000.
Income from its 60% share of output = ₹20,00,000 (given as the sale value of that share).
Profit = ₹20,00,000 − ₹9,50,000 = ₹10,50,000.

Answer: P Ltd shows its 50% share of the pipeline at ₹22,50,000 (after depreciation) under fixed assets, income of ₹20,00,000 from its 60% share of output, expenses of ₹9,50,000 and profit of ₹10,50,000.

Exam tips

Always name the form of joint venture first. Many marks depend on correct classification.
In MCQs, look for the words 'separate entity' and 'jointly held asset'. They tell you the form at once.
State that the venturer includes these items in its own books, so no separate consolidation procedures are needed for these two forms.
In sums, show each item separately so partial marks are available even if the profit is wrong.
Check whether the question asks for depreciation on the asset share. If it does not, call your figure profit before depreciation.
Practise a few short questions that compare all three forms, because theory questions often ask for the difference.

Practice questions from AS 27 Financial Reporting of Interests in Joint Ventures

Jointly Controlled Operations and Jointly Controlled Assets: frequently asked questions

What is the difference between jointly controlled operations and jointly controlled assets?

In jointly controlled operations, each venturer uses its own assets and no asset is pooled. In jointly controlled assets, the venturers jointly control and often jointly own one or more assets. This changes what the venturer records.

Do jointly controlled operations need consolidation under AS 27?

No. The venturer's own assets, expenses, liabilities and share of income are already in its books. So no adjustments or consolidation procedures are required for these items.

How is a venturer's share of a jointly controlled asset shown?

It is shown in the venturer's books under the relevant head by nature, such as plant or building. Any joint liabilities are shown in the same way. A single net investment figure is not used.

Is a separate entity formed in these two forms?

No. A separate entity, such as a company or partnership, exists only in a jointly controlled entity. That form is treated differently.